Editors Note: In light of the very recent article by Frankfurter Allgemeine Zeitung on efforts by cyberturfers Create.Refresh to pay YouTubers to influence debate on the EU Copyright Directive, this analysis of influencers on Twitter is extraordinarily important. Please note, this article was reworked from earlier version, omitting location data that proved to be unreliable).

Who tweets on EU copyright?

The debate on the reform of EU copyright law has many facets and a considerable part of the discussion takes place on Twitter.The power of hashtags

On the one hand, hashtags are used to search for key words in discussions particularly quickly and effectively. On the other hand, it is very easy to find out which topics receive special attention on Twitter by analyzing which terms are often hashed and how often and dynamically they are shared. These terms are then displayed as so-called “trending topics” on the Twitter home page. The so-called “retweeting”, i.e. the unchanged forwarding of a tweet along with hashtags to one’s own followers, is an important factor here.

The frequency of use and distribution of hashtags is therefore often seen as an indicator of the public relevance of certain topics. If, for example, the #saveyourinternet hash tag appears regularly in the trending topics, the impression is created that more and more people are rejecting the copyright reform.

The importance of influencers

Now that the final decision on the reform is about to be taken, it makes sense to take a closer look at the Twitter campaign against the EU copyright reform using aggregated data. The data is based on data from the Talkwalker service, which we have compared with alternative services such as Keyhole. Here we use only the global data without geolocation, i.e. the worldwide number of uses of certain hashtags in a certain period of time, were examined. (the geolocation data proved to be faulty).

Using data from the Hashtagify service, the largest influencers were measured in terms of range.
This makes it easy to see who gave a hash tag the most momentum.The so-called “mentions”, i.e. the mention of a hash tag in a tweet, are decisive for the spread of a hash tag. The more mentions a hashtag experiences, the more it is perceived as relevant for a topic.

The following analysis focuses on the mentions of the hashtags, which play a major role in the campaign against the EU directive from a German perspective, because they are the framing of the anti-reform movement.

#saveyourinternet

#Artikel 13

#upload filter

#linktax

#censorshipmachines

The temporal development of mentions

Most noticeable is the increase in mentions of #saveyourinternet after Google/Youtube started its active campaign around this hashtag in autumn 2018. The numbers doubled.

Illustration: worldwide cumulative representation of the development of the hashtag #saveyourinternet. Source: Talkwalker

The graph illustrates very well the influence that Google has on the debate.

The timing of the votes in the parliament created short peaks peaks in the change (or delta) in number mentions of #saveyourinternetcampaign. These boosts helped prolong and expand the reach of the campaign.

Illustration: Overall development of the hashtag #saveyourinternet 01.2018- 02.2019 on a weekly basis, source: Talkwalker

One can see very well in this weekly development the impact that Google had through its own Twitter channels Youtube and Youtube Creators.

The campaign with the Hashtag #saveyourinternetwas mainly determined by Google and Youtube from the end of October and was much broader in November/December than in the summer of 2018. There were, however, also peaks that could be explained by the two voting dates.

This is confirmed by the reach measured by the Hashtagify service. It is referred to there as Influence, which we refer to in the following charts and in the text as reach.

In this analysis, the top 10 influencers for different hashtags were examined, but this also means that there were of course far more influencers involved.

The top 10 influencers at Hashtag #saveyourinternettherefore had a reach of 1.5 billion

However Youtube and YoutubeCreators constitute 1,3 billion at the reach.

That corresponds to 85% of the Top 10 Influencer.

7 further of the Top 10 Influencer are Youtuber. It should be noted that Twitter accounts from Youtubers sometimes have a slightly different name than the Youtube channels. There are also Youtubers who have several Twitter accounts.

The only outlier is the Pirate Party, with a very small percentage.

The second largest reach in this study was hashtag #Artikel13.

However, it was only 9% of the range of #saveyourinternetwith 135 million reach (Top 10 Influencer number)

6 of the top 10 influencers are Youtuber. Other media also play a role here, as the shares of the Heuteshow, Extra3 and the SZ illustrate.

With a reach of 111 million for the top 10 influencers according to Hashtagify, the hashtag #Uploadfilter comes in 3rd in this review. 5 of the Top 10 are Youtuber.
Other media like Heuteshow, ZDFheute and SZ are also among the Top 10.

The Hashtag #linktaxcomes to a reach of 24 million.

So it seems to have captured less attention.
There is a somewhat different picture.
The US organizations Creative Commons and EFF apparently managed to best spread this hashtag in the debate about an EU legislation.

The Hashtag #censorshipmachinesachieved the lowest reach with 8.4 million related to the Top 10. Nevertheless it is remarkable that a US organization (Creative Commons) with almost 70% share within the top 10 dominates the debate in a European legislative process with an anti-reform hashtag.

Conclusion:

There are two inescapable lessons:
1. fear sells
2. YouTube and Google can effectively use their platforms to capture the attention of their users and to directly affect perceptions on matters relevant to their operations. This capacity can be used to distort debates and create an appearance of movements, or can actually create movements based on the presentation of one-sided information that distorts what is actually a far more nuanced truth.

YouTube intentionally created panic about its future that rather predictably resulted in an outpouring of expression of concern, reflected in the data presented here. A cynical campaign that itself illustrates the dangers to society presented by monopoly/monopsony platforms.

The “Declaration of the Independence of Cyberspace“ published in 1996 by John Perry Barlow begins with the words “Governments of the Industrial World I come from Cyberspace, the new home of Mind. On behalf of the future, I ask you of the past to leave us alone.” One reading of this text entirely rejects the possibility that processes of making and enforcing collectively binding decisions – political processes – apply on the Internet. Another possible reading sees the Internet as a public space governed by rules that must be established through democratic process while also holding that certain sub-spaces belong to the private rather than the public sphere. The distinction between public and private affairs, res publicae und res privata, is essential for the functioning of social spaces. The concept of the “res publicae” as “space concerning us all” led – and not only etymologically – to the idea of the republic as a form of statehood and, later, as a legitimate space for democratic policymaking.

On the Internet, this essential separation of private and public space has been utterly undermined, and the dividing lines between public and private spaces are becoming ever more blurred. We now have public spaces lacking in enforcement mechanisms and transparency and private spaces inadequately protected from surveillance and the misuse of data. Data protection is one obvious field this conflict is playing out on, and copyright is another.

The new EU Directive on Copyright seeks to establish democratic rules governing the public dissemination of works. Its detractors have not only been vociferous – they have also resorted to misleading forms of framing. The concepts of upload filters, censorship machines and link taxes have been injected into the discussion. They are based on false premises.

Upload filters as cogs in a censorship machine

What campaigners against copyright reform term “upload filters” are not invariably filters with a blocking function; they can be simple identification systems. Content can be scanned at the time of uploading to compare it to patterns from other known content. Such a system could, for example, recognize Aloe Blacc’s retro-soul hit “I need a Dollar.” Such software systems can be compared to dictation software capable of identifying the spoken words in audio files. At this point in time, systems that can identify music tracks on the basis of moderately noisy audio signals can be programed as coursework projects by fourth-semester students drawing on open-source code libraries. Stylizing such systems as prohibitively expensive or as a kind of “alien technology” underestimates both the dystopian potential of advanced pattern recognition systems (in common parlance: artificial intelligence) in surveillance software and similar use cases while also underestimating the feasibility of programming legitimate and helpful systems. The music discovery app “Shazam,” to take a specific example, was created by a startup with only a handful of developers and a modest budget and is now available on millions of smartphones and tablets – for free. The myth that only tech giants can afford such systems is false, as the example of Shazam or of enterprises like Audible Magic shows. Identifying works is a basic prerequisite for a reformed copyright regime, and large platforms will not be able to avoid doing so. Without an identification process in place, the use of licensed works cannot be matched to license holders. Such systems are, however, not filters.

How do upload filters work?

The principal argument of critics intent on frustrating digital copyright reforms that had already appeared to be on the home stretch is their charge that the disproportionate blocking of uploads would represent a wholesale assault on freedom of speech or, indeed, a form of censorship. Here, too, it is necessary to look more closely at the feasibility and potential of available options for monitoring uploads – and especially to consider the degree of efficiency that can be achieved by linking human and automated monitoring. In a first step, identification systems could automatically block secure matches or allow them to pass by comparing them against data supplied by collecting societies. Licensed content could readily be uploaded and its use would be electronically registered. Collecting societies would distribute license revenue raised to originators and artists. Non-licensed uses could automatically be blocked. In a second step, errors could be caught through a complaints handling system making decisions on whether complaints are justified on the basis of human analysis – this would represent a clear improvement on the current procedures used by YouTube and Facebook. What automated pattern recognition systems cannot do is determine the meaning of content items at the semantic level. This means that they cannot identify legitimate uses of protected works – in the context of parodies or mash-ups, say, or when an image is reproduced online in a piece of art criticism. In such cases, the identification system would report a “fuzzy” match, stating for example that 40% of a given upload corresponded to a copyrighted file known from the database. To achieve a legally watertight result here, human judgment would be required. Humans can recognize parodies or incidental uses such as purely decorative uses of works in ways that that do not constitute breaches of copyright.

The process of analysis could be simplified further by uploaders stating the context of use at the time works are uploaded. Notes such as “This video contains a parody and/or uses a copyrighted work for decorative purposes” could be helpful to analysts. The Network Enforcement Act (NetzDG) in Germany provides a good example of how automatic recognition and human analysis can work in tandem to analyze vast volumes of information. A few hundred people in Germany are currently tasked with deciding whether statements made on Facebook constitute incitement to hatred and violence against certain groups or are otherwise in breach of community rules. These judgments are significantly more complex than detecting impermissible uses of copyrighted works.

Being obliged to implement human monitoring will, of course, impose certain demands on platforms. But those most affected will be the platforms with the largest number of uploads. These major platforms will have the highest personnel requirements because they can host content of almost every kind: music, texts, video etc. Protecting sites like a small photo forum will be much simpler. If only a modest number of uploads is involved, the forum operator can easily check them personally at the end of the working day. In that case, uploaders will simply have to wait for a brief period for their content to appear online. Or operators can opt to engage a service center like Acamar instead of adding these checks to their own workloads. Efficient monitoring is possible.

An additional misinterpretation propagated by campaigners against copyright reform is that platforms will have to take out licenses for all the content in the world from a near-infinite number of licensing partners. This, too, is inaccurate, since the transfer of liability to platforms only arises in cases in which rightsholders have specifically prohibited the unlicensed use of their works and had the works in question added to a database made available to platform operators through collecting societies. Visions of upload filters leading to dystopian censorship are, it follows, unfounded. This should be clear to anybody who has read the text of the directive and has even a basic working knowledge of informatics.

For a free Internet, we need copyright reform

The reform provides a basis for ensuring artists are fairly remunerated for their work and forces rightsholders to assist in the identification of works by registering their content in databases. Both effects are highly advantageous for users. Under the proposed regime, somebody who wants to use the Rage Against The Machines track “Killing In The Name Of” on the soundtrack of a protest video will no longer have to worry about copyright and can simply upload the video to a platform. Works used will be identified, and the relevant collecting societies will distribute the licensing revenue they receive from the platform. If Rage Against The Machine has objections to the transformative use of their work, they can communicate them to the database. Once the directive has been transposed into national law, this procedure will become standard practice.

It will become possible to publish more content and easier to comply with the law. All of this will contribute to more freedom on the Internet – the kind of freedom that stems from having democratic rules rather than allowing tech giants with their community rules and automated decision-making processes to determine what content is permitted on their platforms and what they are prepared to pay for it.

Barlow overlooked what the author William Gibson had already recognized – that enterprises, when they make the rules, can become more powerful than states. The rejection of state-guaranteed democratic rules creates the power vacuum required for this to happen. This is the wider context that explains why copyright reform is but one battlefield in the struggle for political power on the Internet. YouTube should not be allowed to become the Internet for videos just as Google has practically already become the only filter for web searches. Amazon should not be allowed to evolve from a vendor in the market to the provider of the market and to dictate the earnings of parcel couriers. Rules in digital space must be created and weighed against each other by democratic means and not in an arbitrary fashion dependent solely on who wields the most market power. Artists and net activists should fight this battle together, because the Internet is not some abstract parallel dimension: its data flows determine our creditworthiness just as they supply us with holiday pictures and pervade every aspect of modern life. If we relinquish democratic control over this public space, we will become subject to the despotic rule of neoliberal tech giants, and not merely on the Internet.

Barlow’s manifesto ends with the words: “We will create a civilization of the Mind in Cyberspace. May it be more humane and fair than the world your governments have made before.” Copyright reform will take our society one step closer to this aim. The quasi-governments that must now be opposed are called Google, facebook und Amazon. Those who take the side of these giants in this controversy are opposed to the free Internet in the true meaning of the word.

Translation from German by Sarah Swift.

Authors

Stefan Herwig and Lukas Schneider jointly run a think tank, Mindbase, that tackles questions of Internet policy with academic rigor. Stefan Herwig works in the music industry and advises politicians and enterprises on digital policy issues. Lukas Schneider is an information science expert and a musician and is active in Germany’s Green party (Alliance ’90/The Greens).

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In summer 2018 the campaign platform Saveyourinternet.eu set up to fight against the EU copyright reform. The campaign was organized by C4C, which is mainly financed by the American CCIA and the Open Society Foundation. This was criticized at the time. The website Saveyourinternet was later “taken over“ by EDRi; C4C was out.

Now there is a new action platform Pledge2019.eu, which claims to be “independent“ and „without any support from Google or other web giants.”

We need to look at this in more detail.

The Saveyourinternet.eu storyIn the fight against the EU Copyright Directive, Saveyourinternet.eu’s campaign in summer 2018 was primarily responsible for the bombardment of MEPs with pre-written e-mails, automated tweets and arranged telephone calls, including discussion guidelines.

The campaign was organized by Copyright for Creativity (C4C) and its secretariat N-Square. The C4C has 42 members (EFF, EDRi, BEUC etc.) and, according to its own statements, is mainly financed by the Open Society Foundation (OSF) and the Computer & Communications Industry Association (CCIA). Members of this American industry association include Amazon, Cloudflare, Facebook, Mozilla, Google and Uber.

The page was registered in spring 2018 by the Belgian lobby company N-Square, which also works für Google. And today the registration data and the domain location are concealed by EURID and Cloudflare. The site does not have a legal imprint. There is only the notice that it is “managed” by the EDRi organization.

The new campaign page – Pledge2019.euThe new campaign page is called “Pledge2019.eu” and is used to organize telephone calls to MEPs. The system connects the user either directly with an opponent suggested by the system or the user can select a time to speak with one of the proponents.

Epicenter.works from Vienna is responsible for the content. Legal notice and data protection declaration are, as very often is the case, borderline. But that is not the point.

The site refers (as of 8.3.2019) to 17 organizations which are in some way connected to the site.
Besides EDRi, the current “manager” of Saveyourinternet.eu, there are 13 members of EDRi (3 of them “Observer”). Only three organizations do not belong to EDRi.

Ten of these 17 organizations are also listed at Saveyourinternet.eu. Saveyourinternet also links to Pledge2019.eu using the button “ACT NOW – CALL MY MEPs”.

The impression is that the creators of the old campaign (Saveyourinternet.eu) also operate the new action platform (Pledge2019.eu).

The donors
Pledge2019 emphasizes its independence on the homepage: “This is an independent campaign without any support from Google or other web giants”.

Who exactly pays the bills of the campaign cannot be verified by an outsider. A look at the groups involved is very revealing indeed. To what extent do they appear independent? Have they received money from “Google or other web giants” in the past?

Even a first glance at the transparency reports – some of them are good but often completely non-transparent (more on this below) – is significant.
Even those responsible (Epicenter.works) reported in the Transparency Report 2017 that Mozilla is supporting them with €21,630; which is just over 6% of annual revenues. Another big supporter is the Chaos Computer Club with €15,000. Membership fees are not shown, Epicenter is mainly financed by donations.

Mozilla, which receives its income primarily from Google, also supports other stakeholders, including the Dutch Bits of Freedom, EDRi and the Open Rights Group from the UK. At Bits of Freedom, Mozilla is the largest single donor (petabit-donateur) with more than €10,000 per year. How much was actually paid remains open. At the Open Rights Group, the Mozilla Foundation paid £6,900 in 2016.

Other Internet companies are also mentioned in the reports as donors, such as Leaseweb (often named in connection with piracy) with €5,000 for Bits of Freedom or Microsoft (€10,000) and Wikimedia Germany (€5,793) for EDRi in 2017.

But even Google appears as a direct donor, namely at the Polish Fundacja Panoptykon in 2017 with a four-digit amount and in 2016 with 57,190 Złoty (approx. €13,000) from Google Polska SA and at EDRi in 2016 with €23,000 and in 2015 without stating the amount.

Figure: EDRi – Annual Report 2016, page 40 (in pdf page 43).

EDRi – The finances
Since Pledge2019.eu is mainly backed by EDRi members, it would be a good idea to take a closer look at the finances of EDRi.

In 2017, EDRi generated €728,816. There are hardly any contributions from members. With €39,941 only 5.5% of the revenues are „Members and observers fees“.
2017

EDRi – The finances
Since Pledge2019.eu is mainly backed by EDRi members, it would be a good idea to take a closer look at the finances of EDRi.
In 2017, EDRi generated €728,816. There are hardly any contributions from members. With €39,941 only 5.5% of the revenues are “Members and observers fees”.
2017
Mozilla appears in various positions with a total of €87,205 (Mozilla Corporation: €26,897, Mozilla Corporation: €4,000, Ford Mozilla Open Web Fellow: €34,327, Mozilla Advocacy Fund: €21,981). In total, this is almost 12% of the budget.
The largest donors of EDRi are three foundations:
– Open Society Foundation: €139,596
– Ford Foundation: €136,275
– Adessium Foundation: €131,016.
Their contribution to the financing of EDRi in 2017 was 55.8%.

Figure: EDRi – Annual Report 2017, page 40 (in pdf page 43).

These three foundations also supported EDRi in 2016 with five- to six-digit amounts. The largest donor with €127,080 in 2016 was again the Open Society Foundation.

The importance of foundations
Among the 17 organizations on Pledge2019.eu are two with a budget of less than €2,500 (IT Politcal Association of Denmark, D3 – Defesa dos direitos digitais). The Bulgarian organization could not be examined due to the Cyrillic character set.
Four organizations (Apti, Hermes Center, Homo Digitalis and Xnet) do not disclose funding either on their website or in the EU Transparency Register. However, at least the Open Society has information on Xnet.

Of the remaining 11 organizations, only the Chaos Computer Club is almost totally funded by membership fees. The other ten all disclose donations from at least one of the three listed foundations. In nine cases the Open Society Foundation finances; in three cases the Adessium Foundation; in one case the Ford Foundation.
The Centrum Cyfrowe claims to receive €281,242 from international organizations in 2018. The Open Society Foundation reports a core support of US$240,000 to this organization for the years 2017 – 2018.

Whether all supporters were found remains to be seen. While the Ford Foundation offers a database with all grants, Adessium provides at least a list of the recipients. The Open Society Foundation, which was classified by Transparify as America’s most non-transparent think tank in 2016, is now presenting a database with data from 2016 onwards. However, not all organizations that claim to be financially supported by the OSF can be found there, possibly due to intermediary organizations.

The Ford Foundation and the Open Society Foundation do not appear for the first time as lobbyists against Internet regulation. Both intervened on the subject of net neutrality:

„In areas where Google doesn’t spend the cash directly, it can rely on others to help. Foundations including […] Open Society Institute and the Ford Foundation align closely to Silicon Valley’s view on IP policy. The OSI funds a number of groups who style themselves as „civil society“ or „human rights“ (sic) outfits, including EDRI.“[theregister.co.uk]

Limited transparency
Some transparency reports are very detailed, at least in the years 2017 and 2016, such as EDRi or the Fundacja Panoptykon.

In other organizations, only single figures are disclosed, but the essentials are concealed. The epicenter is an example of intransparent transparency. It does show individual sums from donors amounting to €43,130 for2017. Ultimately, however, only 12.6 % of the funds received are declared. The rest is hidden in partly unexplained categories such as donations, sponsoring and grants, foundations.

A similar example of intransparent transparency is the Digitale Gesellschaft from Germany. The income in 2017is explained in only three positions:
– Membership dues, incl. sponsoring membership dues: €51,386.05 €.
– Grants received: €207,941.59
– Donations received: €14,930.26.
The rest you have to find yourself. With donations, which exceed €1,000 in the calendar year, one wants to publish names of the donors and the amount of the donations quarterly on the Website. Where on the extensive side remains unclear.
However, the call for donations in 2018 reports that funds were received from the Open Society Foundation as well as project-related donations from the City of Berlin, the Federal Office for Information Security (BSI) and the Federal Ministry of Justice and Consumer Protection (BMJV). According to the Digital Society, no funds have been received from companies.

But some are even less transparent. In some organizations, for example, only some donors are named, and no amounts are mentioned; e.g. Open Knowledge International.
Four of the 17 participants in Pledge2019.eu, namely Apti, Homo Digitalis, Hermes Center and Xnet, do not disclose any financing at all (or hide it perfectly on their pages).

It remains remarkable to what extent organizations from the USA (associations, foundations and companies) financially support European activists who are actively involved in legislative processes within the EU.

Jörg Weinrich, Volker Rieck

Volker Rieck is managing director of the content protection service provider File Defense Service (FDS), which works for numerous rights owners. The company also conducts studies on piracy and supports law enforcement agencies with its collected data. His articles occasionally appear on the FAZ, Tarnkappe.info, Webschauder and sporadically on the US blogs The Trichordist and Musictecpolicy. This is always about the various aspects of unregulated content distribution.

In the US, a large technology company is about to go public. Cloudflare, a San Francisco-based company, wants to collect nearly $3.5 billion on the stock exchange in the first half of the year with the support of the investment bank Goldman Sachs. But there are dark shadows over Cloudflare. The spectrum of its customers ranges from credit card fraudsters and spammers, to sites that engage in copyright infringement as a business model, to terrorist sites. Even US embargos are undermined.

What is Cloudflare?

Cloudflare offers a content delivery network.

In simple terms, it provides a kind of turbo drive for web pages, allowing them to be delivered world-wide quickly and securely. Cloudflare places itself between, on one hand, the web page and/or servers of its customers and, on the other, the site visitor and/or user of the service. By enabling it to selectively control and distribute site traffic, it can offer increased speed and protection against network overload attacks (DDoS).

However, Cloudflare also offers another feature: anonymizing its customers.

By placing a virtual screen over the original web page and/or their server, Cloudflare makes the operator practically untraceable. Upon inquiry, Cloudflare will only provide its own data, hiding client information such as hosting service and IP address, making it impossible to take legal action against illicit sites and services.

Civil law inquiries are futile, because Cloudflare only provides the naming of the hosting services, which is worthless without the respective IP address. This is roughly equivalent to seeking info on an unmarked apartment with just the address of a high-rise building housing thousands of residents.

The Cloudflare problem is well known

This anonymizing feature from Cloudflare attracts a number of unsavory customers including, again and again, copyright infringers. But it doesn’t stop there.
Since December 2018, the EU Commission has included Cloudflare on a watch list for counterfeiting and piracy. Most recently, the service received the dubious prize as the worst enemy of the creative community from the US blog TheTrichordist.

The listing of infringing market participants has a long history in the US.
The music association RIAA submits an annual list of the worst offenders to the US Department of Commerce. In 2017, 9 out of 20 violators could not be identified by the RIAA because Cloudflare effectively camouflaged them.
The US film association MPAA is also aware of the problems with Cloudflare obfuscation and names the company in its annual list of interferers.

In the relatively new piracy segment IPTV – the streaming of non-licensed TV signals – the company is also on the move. A study from Fall 2018 shows the role of Cloudflare both in camouflaging the sites that sell IPTV subscriptions and in concealing the origin of the streams.

In a survey of data centers comprising file and streaming hosts in 2016, 40% of the Top 10 and 47% of the Top 30 used Cloudflare.The ECO, a German association, which obviously doesn’t care about anything

Cloudflare is a member of the German industry association ECO. The purpose of this membership is probably to get a discount for traffic at the Frankfurt (DE-CIX) internet node, which ECO operates through a subsidiary.
ECO has never seemed to care that providers who are very heavily involved in piracy, including Cloudflare, are members of the association. In any case, there was no reaction to corresponding reports that ECO members, including Cloudflare, are responsible for over 50% of piracy traffic in the film sector in 2014, with 45.2% of this activity accounted for by Cloudflare and around 6% by a further five members.

The reports of legal proceedings against Cloudflare are long and concern more than just virtual goods. For example, two manufacturers of bridal fashions filed suit for trademark and copyright infringements by plagiarizers who were made anonymous by Cloudflare. And, while a claim brought by adult entertainment provider ALS-Scan ultimately ended in settlement, the judge found that Cloudflare’s activities could significantly support copyright infringement by hosting cached copies of files (though the settlement precluded a final judgment on Cloudflare’s actions and liability).

Supporting Illegal Activity: Calculated or Coincidence?

In Fall 2018, Cloudflare made news by ending its business relationship with pirate hosts like Rapidvideo due to violating its terms of use. Such action begs the question: is the service being cleaned up in anticipation of the IPO or are these just insignificant and cynical platitudes? After all, before this, Cloudflare had only voluntarily terminated its business relationship with US Nazi site the Daily Stormer in 2017.

The current Google Transparency Report offers a look at the actual extent of Cloudflare’s involvement in piracy.
In the report, Google lists all requests from rights holders for deletions from the Google search index that concern rights violations.

In order to understand the importance of Cloudflare to the market, the 5,000 domains that are inactive sites parked with companies such as Team Internet, Sedo or GoDaddy but still protected by Cloudflare have to be subtracted from the 5,000 domains.

This leaves 3,645 domains. Of these 3,645 right-infringing sites, 41.9 % run via Cloudflare. For their part, they are responsible for 44.7 % of the copyright infringements reported to Google.

If one were to extrapolate this proportion to the total number of domains listed in the Google Report for copyright infringements, one would come up with almost 670,000 domains protected by Cloudflare – a significant portion of the 2.2 million domains with requests for delisting from Google’s search engine.

The Watchwebsite Crimeflare is a real treasure trove of information about Cloudflare, liisting650 credit card fraud sides alone, to which Cloudflare offers shelter.

Cloudflare also proudly deals in SSL certificates, providing sites like Phishingseiten the manufactured consumer security and confidence-building necessary to be successful. According to the German magazine Heise, hundreds of such certificates for cheats were issued by Cloudflare.

Of course, as Spamhaus reports, the spreading of Malware often takes place over Cloudflare.

With Cloudflare, extortion is also par for the course, which conveniently generates additional services. By providing anonymity and untraceability to sites threatening, for example, to bring a web page to a standstill through DDoS, Cloudflare can then sell the attacked site its protection services.
A truly special form of customer acquisition.

Cloudflare has also found good business in terror.

As far back as 2012, the news agency Reuters confronted Cloudflare with the fact that it maintained the websites of Hamas and Al-Quds, designated by the US as terrorist groups.
In 2015, a petition against Cloudflare in the US highlighted that the service offered shelter to about 50 websites attributed to ISIS.
And in 2018, terrorist organizations were still being supported, with Dutch security researcher Bert Hubert identifying at least 7 different terrorist organization websites that use Cloudflare.

The Huffingtonpost had these findings evaluated by Benjamin Wittes, Senior Fellow of the Brookings Institution:

“This is not a content-based issue. Cloudflare] can be as pure-free-speech people as they want – they have an arguable position that it’s not their job to decide what speech is worthy and what speech is not – but there is a law, a criminal statute, that says that you are not allowed to give services to designated foreign terrorist organizations. Full stop.”

As icing on the cake, the company even has customers who are on the official embargo list of the US (SDN list). For example, CENTRAL REPUBLIC BANK from the Donetsk region uses Cloudflare’s services.

Against the background of all these facts, two things are worth considering:

1) How has Cloudflare been able to obtain financing rounds from various investment companies in the past, including Google’s parent Alphabet?

2) Does Goldman Sachs actually know anything about the extent of its involvement in rights violations and its support of dubious “ventures,” even to the point of undermining US embargoes?

Risk management is one of the central parameters of investment banks when evaluating investments. Risks must be known and assessable in advance. Cloudflare’s considerable participation in dubious transactions is rare in an IPO and a huge risk. Particularly if, as in the ALS-Scan case, the company is faced with its own liability, or if criminal law is violated through the service’s business with terrorist organizations.

Goldman Sachs and current investors either lack moral standards, are naïve, or consider the risk of failure to be very low, which only shows how urgently we need government regulation of intermediaries on the Internet.

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[Used by permission of the artist. This post is from a series of tweets by Iain Baker of Jesus Jones regarding both their experience being cut off by PledgeMusic and also the implications for the larger music business.]

The music business is fond of winning battles, and losing wars. The best example I can think of is squashing Napster – that victory was anything but – it didn’t hold back the tide of downloads, it merely hastened the rise of streaming.

Above all, it entrenched a generational shift in attitude towards the ownership and transference of digital content. So when the Pledge disaster began to unfold, my first thought was the battle in front of me. How could I get back the thousands of pounds I was owed?

How could Pledge survive, so that I could release more music, in the future, and replicate the successful campaigns we’d created thus far? But, as time passed, my emphasis shifted to the bigger picture, and the war, not the battle.

This was driven by one realisation: what if it happened again? If the site is saved, what’s to stop Pledge just doing it again? What’s to stop them getting another load of money in, and just losing it again? What could stop that? And the answer, sadly – not that much.

I wanted Pledge to be saved – but the chances aren’t high. They’ve apparently got unsustainable debts, huge liabilities, and a board of directors who are – at best – incompetent, and at worst – could possibly be open to allegations of dishonestly and fraudulent mismanagement of funds.

Companies like Pledge are held hostage by VC cash from investors. These investors don’t seem to care whether a struggling songwriter gets a chance to put out a great new record – they just want their investment back, with a profit on top. And I get that – that’s how business works.

But VC cash is flung around in the hope of finding the next big thing – and that need for success comes with a greater need to gamble, and a corresponding disregard for consequences. People poured a lot of money into Pledge, so that Pledge could go out and get more money.

The artistic endeavours that were at the core of Pledge became secondary to the pure profit that could be leveraged. I’m think this hope that investors would see returns is what was driving Pledge’s doomed efforts to grow, exponentially.

I can’t help but think that investing in something like a charity would have been regulated more tightly, ensuring that funds raised were managed effectively, that plans would be in place to ensure realistic growth, whilst still allowing benefactors to be rewarded.

This wouldn’t be an issue, if Pledge were selling biscuits, for example. Trying to sell a great new biscuit, and become the biggest and best biscuit retailer in the world…….

But Pledge was operating in the same way as a Bank, or a building society [or credit union]. They were the custodians of people’s hopes and dreams. In the same way that a bank would take the shoebox of money from under your bed, and say “don’t worry, when you need this, we’ll be there for you.”

But Pledge weren’t there, for anyone. People trusted Pledge, and Pledge didn’t show any of that trust, in return.

The Banking system is held together by trust, and by confidence. But since the financial crisis, it’s been vitally important to underpin that confidence with safeguards, and structures which ensure that banks are protected from contagion and shock to ensure that poor choices cannot threaten people’s trust and security. And this is what needs to happen if we’re going to save Pledge. We need to think about saving the idea of it, and not necessarily the site itself.

For marginalised, struggling artists – or for those who just need to have hope, when traditional lines of business seem closed – a site that offers a way to promote themselves effectively is a godsend.

But the trust which should have kept this system afloat was torpedoed by the very people who were charged with protecting it. We simply can’t let that happen again. We need the business model, but we don’t need the people who ran that business into the ground.

We need a new structure where top-down investment is replaced by community, trust and transparency, growing from the ground, upwards. We need financial safeguards, and guidelines to make sure everyone in the supply chain is protected.

The old model was quick, and easy – some of that simplicity may be lost. Consumer law, and contractual obligations may hamper initial progress, and make the path longer to travel.

But if we’re to try and maintain the vital business model we’ve all come to rely on, then we owe it to ourselves to try and make it work.

When it comes to actually defining this new plan – well, I don’t have the answers. I wish I did. All I know is that if we stick together, and share our communal knowledge, passion, and commitment, we’ll get there.

So – I don’t really know what’s next. If anyone can suggest a way forward, or a way to start putting this into action, I’d love to talk further. You know where I am.

Facebook makes you sit up and take notice. The British former Deputy Prime Minister Nick Clegg, a new Head of Global Affairs for Facebook, was barely introduced when he made his first interesting public statements. “Regulation is not so bad,” Clegg told the Financial Times. As a former senior member of the government, presumably this comes naturally to Clegg because he simply knows it from his work.

Clegg made another surprising yet unsurprising statement on the subject of campaigns. In light of the possible influence of Facebook advertising on elections, Clegg promised that future campaigns on Facebook would be clearly labeled, for example, “Paid for by….”

Facebook is somewhat ahead of the EU in this respect, which is currently making efforts to do something about disinformation—especially in view of the EU election in May 2019.

This includes Brussels demanding monthly updates from Internet companies such as Google or Facebook, in which they must present what they have actually done to counter disinformation by, at a minimum, providing greater transparency. We will see whether this effort to promote greater transparency is successful, and one might be forgiven for having doubts based on past performance, but evolution is an agonizingly slow process.

Other tech lobby groups go the other way…

The Saveyourinternet.eu campaign takes a completely different approach masked in lack of transparency. As described in detail in earlier articles, the website played a central role in the attempted manipulation of EU parliamentarians by mail avalanches and Twitter storms in the summer of 2018.

The website was registered at the time by the lobby company N-Square from Belgium, which also does work for Google.

If you look at the current registration data for the website, you will see that the site is now anonymous. The French company Gandi SAS is used for this purpose, which conveniently and effectively disguises the true name and other data of the registrant.

Illustration: WhoIs of Saveyourinternet.eu at EURID

So it is not clear who is responsible for the page, because even a close examination of the page itself is anything but illuminating. There is a note indicating that the organization EDRi manages the site, but that does not meet the requirements of the E-Commerce Directive which requires a legal notice identifying a responsible person and address.

Illustration: Notes on the management of the site by EDRi

Family Business

One can only speculate about the reasons why EDRi has jumped into the breach here.

Maybe N-Square and its managing director, Caroline De Cock, wanted to get out of the line of fire after the response to its action against the MEPs from summer 2018.

However, presumably through oversight, the registration data for other websites involved in the campaign against the EU copyright reform have not been anonymized, although their look and feel is very similar to that of the Saveyourinternet site.

Fixcopyright.eu e.g. still has registration data of Ms De Cock and her parent company KDC Group and it may only be a matter of time before this page is also anonymized.

You also won’t find any necessary legal notice data on the FixCopyright site. If you follow their Privacy Policy, it forwards you to Create-Refresh, a commercial campaign site operated by the consulting company, Purpose Campaigns LLC from the USA. Create-Refresh has itself been incessantly banging the drum against the new EU Copyright Directive since the summer, including through the placement of banner ads on Twitter, for example.

And it also must be said that the partners of Create-Refresh parent company, Purpose Campaigns LLC, include, among others, Google and the Ford Foundation.

Illustration: List of Partners at Purpose Campaigns LLC

Fixcopyright.eu therefore violates the E-Commerce Directive as well as saveyouinternet.eu!!

In addition, there are no data protection notices in accordance with the DSGVO, which has been in force in the EU since May 2018. Visitors to the site are redirected to the Twitter accounts of MEPs, for example, but they are not informed of this in any privacy notices, which of course also apply to so-called civil society groups.

In the end, however, these anti-Article 13 sites remain a kind of family business.

If one superimposes the financiers of EDRi and Copyright4Creativity, which is still managed by Caroline de Cock, or Purpose Campaigns, there are interesting intersections, be it the Open Society Foundation or the Ford Foundation. These two foundations alone accounted for almost 37% of EDRi revenues in 2017.

Even more exciting is the list of other EDRi donors.

One of them is Mozilla, who is known for financing Open Media, the company that via its subsidiary New/Mode provided the tools for the attack on the offices of members of parliament in the summer of 2018.

Open your wallets

Another donor is Wikipedia Germany.

Anyone who visits Wikipedia from October onwards will hardly be able to escape the appeals for donations. This was of course also the case in 2018.

Illustrations: Donation appeal from Wikipedia Germany in autumn 2018 as well as the thank you message, banner from the Wikipedia Germany page.

Wouldn’t it be more honest in the course of such appeals for donations to say that a large part of the money collected in Germany is thrown into the big pile of money that Wikipedia has in the USA and currently amounts to more than 120 million dollars? (An amount for which one could probably finance the online encyclopedia for years to come.)

How this is compatible with Wikipedia’s non-profit status in Germany is another question that I will leave to another day.

Against this background, the statements made by John Weitzmann of Wikipedia Germany deserve further scrutiny. At a copyright congress in Berlin in November 2018, in front of roughly 250 people, Weitzmann declared that Wikipedia had never supported http://Saveyourinternet.eu . Apparently, he had, or has, a hard time distinguishing fact from fiction as this was clearly untrue. Or perhaps he was misled by Wikipedia and Saveyourinternet’s own disinformation campaign—a campaign itself rooted in obfuscation.

Of course, the picture of deception is incomplete without considering the role of Julia Reda, the only member of the Pirate Party in the EU Parliament. Ms. Reda has been very busy promoting a meme generator on Twitter apparently clinging to the myth that the directive restrict memes. Putting aside the fact that memes are not affected by the directive (and so every meme is compliant with the directive) it is highly instructive to observe the provenance of this CreateRefresh tool so favored by Ms. Reda! Part of the campaign is paid by Purpose Campaigns LLC, which as noted earlier, also lobbies for Google. So the circles are closing here as well.

Illustration: Screenshot of Julia Reda’s Twitter account

It will be interesting to see how the EU reacts to all these interconnected relationships.

Commissioner Mariya Gabriel was presented with comprehensive documentary evidence in Strasbourg at the beginning of December, which presents and proves the background of the non-transparent campaign against the EU, undertaken in conflict with the requirements of existing EU legislation.

Changes such as the changes to the Saveyourinternet.eu website indicate that the campaign operators are apparently becoming aware of the terrain they have entered and seems to be evidence they are distancing themselves.

It will be interesting to see how the EU reacts to all these events.
Commissioner Mariya Gabriel was presented with comprehensive documentary evidence in Strasbourg at the beginning of December, which presents and proves the background of the non-transparent campaign against the EU, undertaken in conflict with the requirements of existing EU legislation.
Revisions such as the anonymizing changes to the Saveyourinternet.eu website indicate that the campaign operators are apparently aware of the terrain they have entered.

Volker Rieck is managing director of the content protection service provider FDS File Defense Service, which works for numerous rights owners. The company also prepares studies on piracy and supports law enforcement companies with the data it collects.Volker Rieck blogs regularly on Webschauder and from time to time on the US blog The Trichordist on various aspects of unregulated content distribution. His articles also appear on Tarnkappe.info and in the FAZ.

This data set is isolated to the calendar year 2018 and represents a mid-sized indie label with an approximately 250+ album catalog now generating almost 1b streams annually. 2018 is the year we saw streaming truly mature as the dominant source of recorded music revenues.

In parsing the data provided we find that digital revenues are 86% of all recorded music revenues globally (RIAA Reports Digital Revenues as 90% of Total). Streaming is 80% (or more) of Digital Music Revenues. Downloads are about 20% of digital music revenues for the year, however if we isolate Q4, it would appear download revenues could be less than 15% of digital revenues. The transition from downloads to streaming is well beyond the tipping point and we wonder how long the major services (Apple, Amazon, Google) will continue to support the format.

As we dig down into the physical revenues much of the gross is eroded by manufacturing, shipping and inventory costs of both CDs and Vinyl. In short, the recorded music business is now the streaming music business. Whatever charm there is to vinyl, it is at best still a truly niche business in terms of meaningful net revenues.

Every year there are surprises in the data and this year is no exception. As always we present this data as a single sample, but one we feel is fairly representative of the state of the business. As such, we welcome comments from others with access to similar data to report on their findings. Some of the percentages may vary dependent upon the genre of music and the size of the label or artist. However, we generally don’t find trends that are completely contradictory to our sample where it matters most, in reporting on stream rates and relative marketshare.

We’ve also simplified the chart this year. Just one chart, and only the Top 20 streamers which represent 99.35% of all streaming dollars. The Top 10 streamers account for over 97% of all music streaming revenues. The Top 5 account for over 88% of all streaming dollars. What we see below is a maturing marketplace with a small number of dominant players. Anyone who thought the digital revolution would remove so called “gate keepers” are painfully wrong.

If you want to compare these numbers against the RIAA’s official report for the first half of 2018, click [here]. That data is for the USA and only through June of 2018. It’s hard to get “apples to apples” reporting, so everything should be taken as different perspectives on the overall business. If you are an artist or label, see how your own data compares.

The biggest takeaway by far is that YouTube’s Content ID, (in our first truly comprehensive data set) shows a whopping 48% of all streams generate only 7% of revenue. Read that again. This is your value gap. Nearly 50% of all recorded music streams only generate 7% of revenue.

The Spotify per stream rate drops again from .00397 to .00331 a decrease of 16%. Apple Music gains almost 3% for an total global marketshare of about just under 25% of all revenue.

Apple’s per stream rate drops from .00783 to .00495 a decrease of 36%. We need to state again, that 2018 saw a massive shift of revenues from downloads to streaming and no doubt this expansion of scale, combined with more aggressive bundling (free trials) as well as launching into more territories was bound to bring down the overall net per stream.

Apple Music still lead in the sweet spot with about 10% of overall streams generating 25% of all revenue (despite the per stream rate drop). Spotify by comparison has nearly triple the marketshare in streams than Apple Music but generates less than double the revenues on that volume.

The biggest takeaway by far is that YouTube’s Content ID, (in our first truly comprehensive data set) shows a whopping 48% of all streams and only 7% of revenue. Read that again. This is your value gap. Nearly 50% of all recorded music streams only generate 7% of revenue. Apple Music and Spotify combined account for just short of 40% of all streams and 74% of all revenue.

We don’t know how the powers that be at the major labels can continue to allow for this gross inequity. It will be interesting to see how YouTube Red numbers evolve over this year. YouTube Red, the newly rebranded version of the disastrous “Music Key” is off to a slow start in a competitive subscription music marketplace. One has to ask, what incentive is there really for Google/YouTube with the Red subscription service when they already benefit from service 48% of all streams while paying only 7% of the overall revenue?

In looking at the per stream rates for song and album, you might want to read this article by Billboard on the current calculation of how many streams equal and album for the purposes of charting. We don’t know if YouTube Content ID streams count towards charting, but they absolutely should not. The report states that, “The Billboard 200 will now include two tiers of on-demand audio streams. TIER 1: paid subscription audio streams (equating 1,250 streams to 1 album unit) and TIER 2: ad-supported audio streams (equating 3,750 streams to 1 album unit).”

In the coming year Amazon’s Unlimited Music service shows promise. We also wonder about Google Play. The payouts on Google Play are fair, but when bundled into the YouTube ecosystem is largely inconsequential in terms of both streams served and revenue. As smart home assistants grow there could be a larger market segment for paying subscribers to have streaming music catalogs available and on demand.

These numbers are from one set of confidentially supplied data for global sales. If you have access to other data sources that you can share, we’d love to see it.

HOW WE CALCULATED THE STREAMS PER SONG / ALBUM RATE:

As streaming services only pay master royalties (to labels) and not publishing, the publishing has to be deducted from the master share to arrive at the comparable cost per song/album.

$.99 Song is $.70 wholesale after 30% fee. Deduct 1 full stat mechanical at $.091 = $.609 per song.

Multiply the above by 10x’s and you get the album equivalent of $6.09 per album

[EDITORS NOTE: All of the data above is aggregated. In all cases the total amount of revenue is divided by the total number of the streams per service (ex: $5,210 / 1,000,000 = .00521 per stream). In cases where there are multiple tiers and pricing structures (like Spotify), these are all summed together and divided to create an averaged, single rate per play.]

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